Over thirty economists, politicians, academics, and businesspeople have put their name to a letter calling on the Chancellor to enact pro-growth policies in order to recover from the lockdown. Ahead of the Chancellor’s speech today, the letter highlights a new body of research from the Institute of Economic Affairs, detailing the conditions that allowed for strong UK growth in the period from 1993-2003. The conditions are not a mystery – this country saw them in the recent past…
The letter argues that its policies, grounded in this country’s economic history, have a proven track record and hence can form a practical basis for an agenda that could be pursued now to boost our economic recovery. They include…
Read the letter and see the list of signatories in full below…
“In this open letter, we seek to spotlight historical evidence of successful economic and fiscal policies drawn from UK data.
The Chancellor and his colleagues at HM Treasury face two major and very difficult-to-resolve issues: highly-stressed public finances, and a lack of labour productivity growth (leading to stagnant real wages and living standards). There are other pressing economic issues, but these stand out as secular, rather than exclusively Covid-19 related.
Conditions for growth are not a mystery: we have seen them in the UK in the recent past. In the last 40 years, the highest period of growth of government revenue was 1993-2003. This coincided with a period of strong GDP per capita and productivity growth.
The conditions that pertained at the time make a convincing case for the policies needed to stimulate and sustain our economic recovery. They were, in summary:
- A top rate of income tax of 40%;
- Corporation tax ranging from 33% to 19%, falling throughout the period;
- Highest rate of Stamp Duty on residential property of no more than 4%;
- VAT rate of 17.5%;
- Capital Gains Tax rate at the same as income tax rate, but Taper Relief (from 1998-99) reducing the rate on shares by up to 75% (i.e. giving a top rate of 10%);
- A light regulatory burden on all productive sectors: less financial regulation, less labour market regulation, more targeted health and safety regulation, less energy sector regulation.
Governments have choices. This government may not choose to adopt some or any of these successful policies. At the very least, however, this evidence should weigh heavily on any decision-making.”
List of signatories:
Andrew Allison, Head of Campaigns, The Freedom Association
Steve Baker, Member of Parliament for Wycombe
Professor Christian Bjørnskov
Douglas Carswell, Former Member of Parliament
Professor Tim Congdon
Alison Cork, Founder, Alison At Home
Professor Kevin Dowd
Martin Durkin, Chief Executive, Wag TV
Professor Anthony Evans
Suzanne Evans, Director, Political Insight
Chris Gibson-Smith CBE, Former Chairman, London Stock Exchange Group
Lord Hamilton of Epsom
Dan Hannan, Former MEP
Laurence Hollingworth, Vice Chairman, JP Morgan
Jonathan Isaby, Director, Politeia
Julian Jessop, Independent Economist
Matt Kilcoyne, Deputy Director, Adam Smith Institute
Dr Ruth Lea CBE
Graeme Leach, Chief Executive, Macronomics
Andrew Lewer, Member of Parliament for Northampton South
Lord Lilley
Mark Littlewood, Director General, Institute of Economic Affairs
Tim Martin, Founder, Wetherspoons
Professor Catherine McBride
Professor Patrick Minford
Terence Mordaunt, Co-owner, Bristol Port Company
John O’Connell, Chief Executive, TPA
Alexandra Phillips, Former MEP
Neil Record, Chairman, Institute of Economic Affairs
Matt Ridley, House of Lords
Professor Stan Siebert
Greg Smith, Member of Parliament for Buckingham
Carlo Stagnaro
Professor James Tooley
Dr Radomir Tylecote
